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Legacy Giving

Gifts of Real Estate

Goal: Avoid capital gains tax on the
sale of a home or other real estateBenefit: A charitable tax deduction and potential diversification with the possibility of reducing or eliminating capital gains tax

Eileen and her husband, Paul, enjoyed their house. They had raised their
three children there and had many family memories. But after Paul passed
away suddenly, Eileen began to find that the old house was a burden. Without
Paul to take care of things and with their children involved in their
own families miles away, it seemed that the house was too big, too old
and even a bit lonely.

Eileen: "Paul always said that I was the solid one. If there was a decision
to be made I could get to the bottom line pretty quickly. Well, the bottom
line was that I needed to make a change for a number of reasons. I decided
to move into a smaller place in town, easier to take care of and one that
was part of a neighborhood where I could make some new friends and be
a part of activities and things. And where my grandchildren could still
come and visit."

"Paul and I had talked about what to do when we got to this stage
in our lives. I just thought Paul would be here with me, but that wasn't
to be. We had planned and knew I would have enough money to live comfortably.
Initially we thought I'd need the money from the sale of the house, but
I really don't."

"My advisor went over the numbers with me. If we sold it, there would
be a large capital gain and taxes to pay. But by putting the house in
a trust that then sells it, I avoided having to recognize the taxable
capital gain. The trust takes all the money from the sale of
the house and invests it, and I get the income from the trust for life.
Then, an organization that is doing great things will receive the remainder
of the trust."

Depending on the circumstances that are involved, gifts of real estate
can be an effective means of planning a gift. Much of the individual wealth
in America is invested in real estate. While the first thought often is
a home or farm, real estate also can involve a vacation or second home,
an apartment or commercial building, a shopping center, or undeveloped
land.

Often our real estate holdings, be it our house, a second home or investment
property, are a significant part of our net worth. Gifts of real estate,
therefore, can enable us to make significant contributions. Each piece
of property and its unique circumstances need to be reviewed to determine
the suitability of the property as a gift. Generally speaking, a rule
of thumb is that an acceptable piece of property is one that can be readily
sold.

Also, there are many ways to donate property. It can be an outright gift,
a retained life estate, or placed in a trust (such
as what Eileen and her advisor set up). A bargain sale may be used to provide funds to the donor using a part sale, part gift. In any case, while we discuss
some generalities here about donating real estate, if you are considering
such a gift to KBIA, please contact
us to discuss its suitability.

In addition to making a significant contribution, there can be other
benefits for you:

There may be a charitable income tax deduction that would lower your
income tax.

If your property has appreciated in value since you acquired it,
there might be a large capital gains tax that would result if you sold
it. By donating the property, you may be able to avoid realizing the
capital gain.

Depending on your state regulations, you may be able to turn the
property into a gift that is structured to provide income for you and
a beneficiary.

If the property is your home or farm, you may be able to make a gift
of it now and continue to live in it for the rest of your life and receive
tax benefits the year of the gift.

If the contribution from your property exceeds the allowable charitable
deduction limits, the deduction may be carried forward for five years.

There can be significant advantages to using real property to fund a charitable
gift. Please contact us to discuss your
unique circumstances.

For more information or a confidential discussion of your charitable options, please email or call the KBIA General Manager, Mike Dunn, at (573) 882-3431.

Please
note, individual financial circumstances will vary.
The information on this site does not constitute legal
or tax advice. As with all tax and estate planning,
please consult your attorney or estate specialist. All
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